The Pakistan Credit Rating Agency Limited
04-Dec-18
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NAFA Government Securities Savings Fund
| Rating Type | Stability Rating | |
|
Current (04-Dec-18 ) |
Previous (30-Jun-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The fund's objective is to provide a competitive return from the portfolio of low credit risk by investing primarily in Government Securities.
The rating reflects the fund's strong credit profile emanating from its investment policy to invest the majority of its net assets in Government Securities (T-bills) and remaining investments will be in bank deposits and money market placements etc. At end-Jun 18, 51% of the fund’s assets were invested in Government securities. The remaining assets of the fund were invested with banks as banking deposits with majorly 'A+' and above. On a monthly average basis, the weighted average maturity of the fund was 14 days in Jun-18. The unit holding pattern of the fund government securities with top 10 investors representing ~84% of the fund's assets, (of which ~62% are owned investments) which exposes the fund to a low level of redemption pressure.
Going forward the fund intends to maintain its allocation towards government securities (T-bills) and cash balance with a minimum rating of 'A+' and above. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating.
About
the Entity
NBP Fund Management Limited (Formerly: NBP Fullerton Asset Management Limited), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. NBP is the largest shareholder of the AMC with a stake of ~54%, followed by Baltoro Growth Fund ~36% stake which they acquired from Alexandra Fund Management Pte. Ltd. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, also holds a 10% stake in the company.
The company’s nine-member Board of Directors include three independent directors and the CEO. During the year Mr. Mudassir Husain Khan and Mr. Tariq Jamali joined the company’s board as a Non-Executive director, both are the representatives of the bank. The company is currently managing a diversified fund slate of twenty-five funds.